The Department for Work and Pensions (DWP) has confirmed that state pensioners living alone could receive over £4,300 through Pension Credit. However, an estimated 880,000 low-income pensioner households who are eligible for this benefit are currently failing to claim it.
What is Pension Credit?
Pension Credit is worth an average of £4,300 per year and can also qualify claimants for other financial support, such as winter fuel payments. The Labour government announced in April that Pension Credit will rise by 4.8%, making it worth an average of £4,300 annually. This increase unlocks further support, including help with housing costs, council tax, and free television licenses.
Understanding the Two Parts of Pension Credit
The BBC explains that Pension Credit is not a single benefit but two separate components. Pensioners may be entitled to one or both of these benefits.
Guarantee Credit: This is the first part of Pension Credit, payable to individuals who have reached state pension age. It bridges the gap between the government's minimum income threshold and the claimant's actual income. The calculation involves three stages: first, determining the appropriate minimum guarantee; second, calculating the claimant's income from sources such as the state pension, occupational pensions, private pensions, and most other benefits (excluding attendance allowance and disability living allowance); and third, subtracting the income from the minimum guarantee.
Savings Credit: This second part of Pension Credit is designed to reward individuals who have secured additional income, such as through an occupational pension or SERPS, that exceeds the full rate of the basic state pension.
Recent Claim Statistics
Recent figures indicate that 42,500 Pension Credit claimants have been successful in recent months, while thousands have been rejected and others are awaiting a decision. Conservative shadow work and pensions secretary Helen Whately highlighted that hundreds of thousands of eligible pensioners are missing out on this financial support.
